More than 75 million Nigerians working in the informal sector are likely to retire without any form of pension or retirement savings, the Director-General of the National Pension Commission (PenCom), Ms Omolola Oloworaran, has warned.
She raised the alarm on Monday in Abuja while speaking at the presentation of a licensed accredited pension agent certificate to Awabah, the first company to be approved under PenCom’s newly introduced pension agent framework.
According to her, Nigeria’s pension system has recorded major success since reforms began in 2004, but those gains have largely benefited workers in the formal sector, leaving millions of informal workers without any form of retirement protection.
Citing data from the National Bureau of Statistics (NBS), Oloworaran said over 90 per cent of Nigeria’s workforce operates in the informal sector. Despite this large number, pension coverage among informal workers remains extremely low, standing at about 0.25 per cent.
She explained that this means millions of Nigerians who contribute daily to the economy will likely retire with nothing to fall back on.
“These are market traders, artisans, farmers, technicians, transport operators, small business owners and young entrepreneurs who power the economy every day,” she said.
“Yet, as of today, pension coverage for this group stands at just 0.25 per cent. In practical terms, we can round that down to zero.”
According to her, the implication is that most informal workers retire without savings, pensions, or any form of social protection, making old age a period of fear rather than rest.
“After decades of hard work, old age should bring peace, not fear,” Oloworaran said. “This gap is not only a social challenge; it is a national risk. A country cannot be strong when millions slide into poverty, and an economy cannot be stable when households lack protection.”
The PenCom boss recalled that Nigeria’s pension system was in serious trouble before the 2004 Pension Reform Act. At the time, pension payments were based on promises that were not backed by funds.
Many retirees waited for years without receiving their pensions, while others died in long queues. Families suffered, and retirement was often linked with hardship and shame.
She said the 2004 reform changed everything by introducing the contributory pension scheme, where both employers and employees save regularly into Retirement Savings Accounts.
That system replaced uncertainty with structure and ensured that pensions were funded and properly managed.
“Before 2004, pensions were promises without funding,” she said. “That reform replaced uncertainty with structure, promises with savings and politics with discipline.”
According to her, pension assets have now grown to over ₦27 trillion, with more than 10 million Nigerians owning retirement savings accounts.
She added that Nigeria now operates one of the strongest pension systems in Africa and ranks well globally in pension management.
Despite these achievements, Oloworaran admitted that the reform mainly secured workers in government offices and private companies, leaving out the informal sector, which makes up the majority of Nigeria’s workforce.
“Nigeria is not a formal economy,” she said. “That leaves a huge gap that we must urgently close.”
She warned that if nothing is done, widespread poverty among the elderly could become a serious social and economic problem in the future.
According to her, the next phase of pension reform must focus on extending coverage to informal workers, who earn irregular incomes and often lack access to traditional financial services.
To address the problem, PenCom has introduced new regulations that allow for the accreditation of pension agents. These agents are expected to operate within communities and workplaces, helping informal workers to register, contribute, and understand how pensions work.
As part of the reforms, the micro-pension plan has also been rebranded as the personal pension plan to make it more appealing and easier to understand.
Oloworaran said technology will play a major role in expanding pension coverage. She explained that informal workers would be able to make small and flexible contributions using their mobile phones.
“If we are serious about reaching over 75 million Nigerians, we cannot rely on manual processes or paper forms,” she said.
“We must meet Nigerians where they already are—on their phones—through digital onboarding, daily or weekly contributions, real-time access to accounts and simple benefit payments.”
She added that pension contributions are tax-deductible, meaning contributors can reduce the amount of tax they pay by saving towards retirement.
The PenCom DG said partnerships with payment service banks, telecommunications companies and fintech firms will help drive wider participation in the pension system.
“These partnerships will help us reach workers in markets, motor parks, farms and workshops,” she said.
She described the accreditation of Awabah as a major milestone, noting that it marks the beginning of a new phase in pension distribution, especially for informal sector workers.
She also said the initiative would create jobs, as thousands of pension agents are expected to be trained and deployed across the country to support enrolment and pension education.
Speaking at the event, the Chief Executive Officer of Awabah, Mr Tunji Andrews, said the company was created to solve the problem of lack of financial protection among informal workers.
“When we started Awabah, we were driven by a simple idea,” he said. “No African worker should be one accident or illness away from poverty.”
He said the company observed that many skilled workers and traders contribute greatly to the economy but have little or no protection against health issues, accidents or old age.
According to him, Awabah’s accreditation by PenCom allows the company to formally support pension inclusion across the country.
“What we are launching today is a nationwide rollout of an accredited agent network designed to formalise the workforce’s financial security,” he said.
Andrews explained that Awabah’s pension offering combines retirement savings with insurance to make protection more affordable and attractive to informal workers.
“Through our ValuBah bundle, workers can save for retirement while also enjoying health insurance, accident cover and life insurance,” he said.
He added that for as little as ₦3,000 per month, informal workers can begin to build long-term financial security.
While Nigeria’s pension reform has secured formal sector workers over the past two decades, more than 90 per cent of the workforce remains uncovered.
With the introduction of personal pension plans and accredited pension agents, PenCom says it is taking deliberate steps to close this gap.
For now, PenCom’s warning serves as a wake-up call: without urgent action, millions of hardworking Nigerians could face old age without savings, support or security.
Leave a Reply